Answer the following question:

Sashas Foods produces frozen meals, which it sells for $8 each. The company uses the FIFO inventory costing method, and it computes a new monthly fixed manufacturing overhead rate based on the actual number of meals produced that month. All costs and production levels are exactly as planned. The following data are from Sashas Foods first two months in business:

	January	February
Sales	1500 meals	1800 meals
Production	2000 meals	1600 meals
Variable manufacturing expense per meal	$5	$5
Sales commission expense per meal	$1	$1
Total fixed manufacturing overhead	$800	$800
Total fixed marketing and administrative expenses	$700	$700

Requirements:

1. Compute the product cost per meal produced under absorption costing and under variable costing. Do this first for January and then for February.

2a. Prepare separate monthly income statements for January and for February using (a) absorption costing and (b) variable costing. Show all work.

2b. Show all work.

January Absorption Variable costing costing 5.40 $ 5.00 February Absorption Variable costing costing $ 5.50 $ 5.00 Total product cost sasna s Foods February 28 Income Statement (Absorption Costing) Month Ended January 31 Sales revenue $ 12,000 Less: Cost of goods sold: Beginning finished goods inventory 0 Cost of goods manufactured 10,800 Cost of goods available for sale 10,800 Ending finished goods inventory (2,700) Cost of goods sold (8,100) Gross profit 3,900 Operating expenses (2,200) $ 1,700 Operating income $ January 31 $ February 28 $ $ $ $ Sales revenue Variable expenses: Variable cost of goods sold: Beginning finished goods inventory Variable cost of goods manufactured Variable cost of goods available for sale Ending finished goods inventory Variable cost of goods sold Sales commission expense Contribution margin Fixed expenses: Fixed marketing and administrative expenses Fixed manufacturing overhead Operating income